A knock-on effect from the Ukraine crisis looks like
cushioning the fall in European Union wheat exports from record levels expected
for this season, by diverting buyers from the former Soviet Union state.

Strategie Grains raised by 1.3m tonnes to 25.6m tonnes its
forecast for European Union soft wheat exports, far exceeding the standing
record of some 22m tonnes, flagging in particular increased trade from nations
such as Germany, Poland and Romania.

Although European Union wheat values had "soared" overall
last month, "the increase concerns western EU countries, while prices in
central and south eastern EU remained virtually steady", the Paris-based
analysis group said.

The report, which came ahead of weekly EU crop export data
due later on Thursday, tallies with observations by FCStone that German wheat
basis "remains seasonally weak, suggesting a continued good supply despite a
firm export programme", although the broker has identified that trend extending
west into France too.

"French and wheat basis," the gap between cash and futures
prices, "continue to trade below three- and five-year average basis levels for
the time of year", FCStone said.

Ukraine worries

And European shipments look like remaining strong in 2014-15
too, with Strategie Grains upgrading its forecast by 700,000 tonnes to 22.4m
tonnes – around record-taking levels itself were it not for this season's performance.

The revision, which followed a 1.2m-tonne upgrade last
month, reflected expectations that buyers in the Middle East and North Africa,
a major import region which normally turns to Ukraine for much to its supplies,
would, given the Crimea crisis, prize the certainty of exports from nearby Europe instead.

The analysis group also raised its estimate for the EU soft
wheat harvest, by 200,000 tonnes to 137.7m tonnes, reflecting increased
estimates for sowings in Estonia, France, Poland and Romania, although it did
highlight regional dryness which is attracting growing investor attention.

Crops in central Europe and the Baltic states require rain
after several weeks of dryness, Strategie Grains said.

More on this theme may emerge on Monday, when the European
Commission's Mars agricultural meteorology unit releases its monthly crop
report.